TJX Companies (TJX) Benefits from Solid Marketing Efforts and Expansion

TJX Companies, Inc. TJX is building on its solid store growth and e-commerce efforts. A leading discount retailer is committed to increasing growth through effective marketing initiatives. The management focuses on offering consumers attractive offers on popular brands and fashions.

With these advantages, the company has started fiscal 2025 on a strong note, with Q1 top and bottom lines increasing year-over-year. These results reinforce management’s confidence in its ability to gain market share across all regions. The company has started fiscal Q2 on a positive note, anticipating several business opportunities for the rest of the year. The Zacks Consensus Estimate for fiscal Q2 earnings has increased 1.2% to $4.09 per share over the past 60 days.

With all that said, the company isn’t immune to rising costs. Let’s dig deeper.

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Solid performance and view

In the first quarter of fiscal 2025, net sales were $12,479 million, up 6% (also at constant currency or cm3). The Company reported higher net sales in the Marmaxx (United States), HomeGoods (United States), TJX Canada and International (Europe and Australia) segments. TJX Companies reported computer sales growth in all segments, entirely driven by customer transactions, underscoring its strong value proposition.

For fiscal 2025, management expects consolidated comparable-store sales to increase 2% to 3%. The company expects fiscal 2025 earnings per share (EPS) to be in the range of $4.03 to $4.09, compared to the previously expected range of $3.94 to $4.02. For the second quarter of fiscal 2025, TJX Companies expects consolidated comparable-store sales to increase 2% to 3%. The company expects fiscal second-quarter EPS to be in the range of 88 cents to 90 cents, suggesting year-over-year growth.

Growth efforts are on track

TJX Companies is benefiting from solid store and e-commerce development efforts. The company is rapidly expanding its presence in the United States, Europe, Canada and Australia. In the first quarter of fiscal 2025, the company added 18 new stores, ending the quarter with 4,972 stores. Looking ahead, management sees the potential to expand its current retail banners by adding at least 1,300 additional stores in these regions in the foreseeable future.

With the growing number of consumers shopping online, TJX Companies has undertaken several initiatives to increase online sales and strengthen its e-commerce business. The company intends to introduce new assortments to stationary and online stores on an ongoing basis throughout the spring and summer seasons and beyond.

Solid marketing efforts

TJX Companies remains committed to driving growth through effective marketing initiatives and loyalty programs. Incidentally, the company’s aggressive marketing and advertising campaigns across multiple media further contributed to the growth. It is on track to attract new customers of all ages, including large numbers of Gen Z and Millennial customers, to drive growth. Additionally, TJX Companies’ gifting initiatives, unique among off-price retailers, and its loyalty card program helped improve customer engagement.

High costs, a problem

Over time, TJX Companies has struggled with the unfavorable impact of high selling and operating costs. In the first quarter of fiscal 2025, selling, general and administrative expenses as a percentage of sales were 19.2%, an increase of 0.2 percentage points. The increase in these costs can be attributed to rising store wages and HR and payroll costs. The company’s selling expenses increased 4.4% to $8,739 million in the quarter. Management expects store wages and salary costs to increase in fiscal year 2025.

Summary

Overall, TJX is poised for continued growth, supported by improved merchandise margins and spend leverage. We believe that The TJX Companies’ off-price model, along with strategic store locations, impressive fashion brands and products, and efficient supply chain management, will likely help its performance.

Shares of this Zacks Rank #3 (Hold) company have gained 9% over the past three months compared with the industry’s gain of 6.3%.

Take a look at these solid choices

We distinguished three companies with a better rating, namely: Abercrombie & Fitch Co. ANF Gap sp. GPS and DICK’S Sporting Goods DKS.

Abercrombie & Fitch, a specialty retailer of high-quality, premium casual clothing, currently sits at a Zacks Rank of #1 (Strong Buy). ANF surprises with four-quarter average earnings of 210.3%. You can see complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Abercrombie & Fitch’s sales and earnings for the current fiscal year is projecting growth of 10.4% and 47.3%, respectively, from the year-ago period.

The fashion apparel and accessories retailer Gap currently boasts a Zacks Rank #1. GPS has posted an average annual earnings surprise of 202.7% over the trailing four quarters.

The Zacks Consensus Estimate for Gap’s sales and earnings per share for the current fiscal year is projecting an increase of 0.2% and 21.7%, respectively, from the prior-year levels.

DICK’S Sporting operates as a multi-channel sporting goods retailer. It currently has a Zacks Rank #2 (Buy). DKS has an average earnings surprise of 4.7% for the last four quarters.

The Zacks Consensus Estimate for DICK’S Sporting’s sales and earnings for the current fiscal year is suggesting an improvement of 1.8% and 6.6%, respectively, from the prior-year figures.

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